Helms v. B & L Investment Co., Inc.

198 S.E.2d 79 (1973) 19 N.C. App. 5

Charlie Lee HELMS et al.
v.
B & L INVESTMENT CO., INC., a North Carolina Corporation, and David R. Lanter.

No. 7326SC507.

Court of Appeals of North Carolina.

July 25, 1973.

Parker Whedon, Raleigh, for plaintiff appellees.

Bradley, Guthery & Turner by Paul B. Guthery, Jr., Charlotte, for defendant appellants.

BALEY, Judge.

The sole issue for determination in this case is whether the supervening action of the governmental authorities of the city of Charlotte and Mecklenburg County in prohibiting the defendants from extending water and sewer lines to the land sold to plaintiffs will excuse the defendants from the performance of their obligations to plaintiffs under the guaranty or from the payment of damages for their failure to so perform.

The material facts concerning the issue of liability are uncontradicted. As an inducement to plaintiffs to purchase the property, the defendants made an unqualified guaranty that water and sewer lines would be extended to the property line within six months after 12 February 1969. The defendants admit that the water and sewer lines were not extended to plaintiffs' property but contend that it was impossible to make such extension because they were prohibited by governmental authorities. It is a question of law for the court to determine whether the action of governmental authorities will excuse the defendants from liability for the failure to perform their contract.

"As a general principle, nonperformance of a contract is excused where performance is rendered impossible by the law, provided the promisor is not at fault and has not assumed the risk of performing, whether impossible or not.. . ." 17 Am.Jur.2d, Contracts, § 418, p. 872.

". . . [T]he terms of a contract may be such that, expressly or by construction, one of the parties assumes the risk of subsequent governmental interference preventing his performance of his undertaking." 17 Am.Jur.2d, Contracts, § 419, p. 875.

"Undoubtedly, a competent party may, by an absolute contract, bind himself to perform things which subsequently become impossible or to pay damages for the nonperformance . . . ." 17 Am.Jur.2d, Contracts, § 423, p. 878.

"Where a party enters into a contract knowing that permission of government officers will be required during the course of performance, the fact that such permission is not forthcoming when required does not constitute an excuse for nonperformance." 17A C.J.S., Contracts, § 463(1), p. 611.

". . . [T]he general rule is that performance of antecedent obligations may not be excused by subsequent inability to perform on account of unexpected difficulties or unforeseen impediments, short of prevention by wrongful act or conduct of the other party to the contract." Goldston Brothers v. Newkirk, 233 N.C. 428, 431, 64 S.E.2d 424, 427.

See also Annot., 84 A.L.R. 2d 12 (1962).

In applying these principles of law to the present case, it seems clear that before the plaintiffs would agree to purchase the tract of land involved, they demanded assurance that water and sewer facilities would be made available within a six-month period. To induce the plaintiffs to make the purchase, the defendants, both corporate and individual, executed a separate and unconditional guaranty that the water and sewer facilities would be provided within six months.

This guaranty was clear and unequivocal in its terms and placed on the defendants the absolute responsibility for performance regardless of any contingency. The defendants by every reasonable interpretation assumed the risk of subsequent governmental interference which might prevent performance of their obligation. In view of the current emphasis upon pollution problems in metropolitan areas, the parties may or in the exercise of reasonable care should have anticipated that they might encounter some difficulty in providing the necessary water and sewer facilities for this particular tract of land. The insistence upon the guaranty by plaintiffs and that it be signed by the individual defendant is some indication that this likelihood was within the contemplation of the parties.

We hold that the defendants under the terms of their guaranty to plaintiffs have assumed the risk that the governing authorities of the city of Charlotte and Mecklenburg County might interpose objections to the extension of water and sewer lines to property sold by them to the plaintiffs and are liable to the plaintiffs for any damages sustained by their failure to perform their contract.

The action of the court below in granting summary judgment upon the issue of liability is sustained, and the cause is remanded for a determination of damages.

Affirmed.

CAMPBELL and HEDRICK, JJ., concur.